Mode Choice, Energy Consumption and Emissions in U.S. Freight Transportation

We exploit newly available micro data on goods movement in the U.S. to model shippers’ freight mode choices. Because freight modes have vastly different fuel intensities, shippers’ choices have large implications for fuel consumption and emissions. We find higher fuel prices yield substantial shifts from less to more fuel efficient modes, particularly rail. We extend our model to analyze recently enacted heavy duty truck fuel economy standards. Surprisingly, fuel economy standards can increase emissions and fuel consumption by shifting shipments to less fuel efficient modes. As a result, savings can be substantially less than predictions that ignore modal substitution. ∗The authors are grateful for research support from the Alfred P. Sloan Foundation. The authors thank seminar participants at the UC Berkeley Energy Institute at Haas and the National Bureau of Economic Research conference on Transporting Energy for helpful comments. Department of Economics, University of California at Davis and National Bureau of Economic Research. Department of Economics, University of Colorado at Boulder.